A bankruptcy petition must include a list of all assets owned by you at the time you file your case. You cannot leave anything out; you must make your best effort to disclose it all. But there is one thing that people tend to overlook that can cause a problem later.
What Gets Left Out of the Petition?
What is it? A claim for an interest in marital property during a divorce. This is often overlooked because you may not have legal title to the asset, such as the marital home.
Suppose you are divorcing your husband here in New Jersey, and his is the only name on the deed. You wouldn't list it as real estate, but you might be seeking it in the divorce through equitable distribution.
What Problems Can Leaving Out This Asset Cause?
If so, this claim is an asset, and not listing it can cause problems (and possible loss of the asset), including, but not limited to:
- Your husband claiming in the divorce that you have no interest in the home because you did not list it in the bankruptcy.
- The court not allowing you to exempt the equity in the home due to your failure to list it, thus losing its value when it is sold by the trustee
It does not matter that no final judgment for divorce has been entered with an order for equitable distribution. Your right to the marital property arises from the marital relationship, not the ultimate court order. That right may not be in a specific dollar amount (to be determined by the family court some time in the future) and it may be contingent upon said court's ruling, but it is still there.
So What Do I Do?
Although a bankruptcy filing can be a key and advantageous part of as divorce, it should not be done without the assistance of an attorney. There are just too many pitfalls like this one.
So, if you are in the middle of a divorce here in Burlington, Camden, Gloucester, Salem or Cumberland County, New Jersey, are thinking about filing bankruptcy, and are ready to take action, call my office right away at 856-432-4113 or contact me through this site for a free consultation in my Woodbury office to discuss your case.
If you are just looking for more information about divorce and bankruptcy, then download my free book, Top Questions Divorcing Couples Ask About NJ Bankruptcy,